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05 Jul 2006

Source: AlertNet

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A girl in Pakistan-administered Kashmir waits to receive aid money months after the earthquake of October 2005
REUTERS/Stefano Rellandini

Africa's a nice little earner, Tidy profits for aid consultants, Somaliland, Flower power and AIDS...

"Give a man a fish and he will eat for a day," says the proverb. "Get a Western consultant to teach him how to fish," adds the Financial Times, "and he'll eat for life, the consultant will get rich and the government giving the money will boost its aid figures."

The newspaper's comment follows the publication by international aid agency ActionAid of Real Aid 2, a report that says too much aid money is spent on over-indulged consultants who jet across the world in first class seats, stay in luxury hotels and move around the host country in air-conditioned bubbles with little understanding of what will really benefit the poor. As they sip their gin and tonics on the flight home they write up disastrous advice, often advocating ill-fated, high-tech solutions which are then implemented by companies based overwhelmingly in the donor country.

This kind of "Technical Assistance" is big business, attracting a fifth of the European Union's 45 billion euros ($57 billion) of overseas development funds in 2005. In the United Kingdom, the report says that consultants use up 12 percent of the budget administered by the Department for International Development(DfID). DfID has given 146 million euros ($186 million) to the big five consultancy firms (KPMG, Deloitte, Ernst and Young, Accenture and PriceWaterhouseCoopers) in the last five years, ActionAid says.

It provides plenty of examples of questionable outcomes. For example, in Tanzania, Japanese consultants on an irrigation project introduced the use of diesel pumps that have now, after a hike in fuel costs, have become too expensive for local farmers. The pumps now lie idle and farmers are worse off than before, ActionAid claims.

"Too much aid continues to be identified, designed and managed by donors," says the report's author Romilly Greenhill. "It is tied to their countries' own firms, is poorly coordinated and is based on a set of assumptions about expatriate expertise and recipient ignorance."

In addition to technical assistance, ActionAid says a lot of official aid in fact goes on administration costs, double-counting debt relief, tied aid, donor aid that is allocated to geopolitical and commercial priorities and domestic refugee spending in donor countries. In total, ActionAid estimates that almost half of all aid fails to directly target the poor and is therefore "phantom aid".

So what's the solution? A compulsory placement in a mud hut for any KPMG upstart who hopes to pronounce on the welfare of the world's poorest? Not enough, says ActionAid: they should stay at home, and poor countries should have more say over how aid is spent.

Britain's DfID fights back, calling some of ActionAid's accusations "absurd".

"Both debt relief and technical assistance show real results," it says. "In Rwanda, consultants have helped the government to improve its tax collection so that more money can be spent on schools and hospitals. In the mid-1990s, before debt relief, only 2.5 million Ugandan children were in school - now, after debt relief, there are 6.5 million."

A tidy profit from Africa

ActionAid's report coincided with the first anniversary of the G8 summit in Gleneagles. So does a report by Christian Aid which takes a bird's eye view of the flow of money between Africa and the U.K., to show how wealth continues to haemorrhage from the continent despite aid and debt pledges. Here are the figures:

Money from the U.K. into sub-Saharan Africa:

Aid and debt relief: £1.35 billion

Payment for goods imported into the U.K.: £7 billion

Remittances from expatriate Africans: £460 million

Foreign direct investment by U.K. firms: £6.8 billion

Total: nearly £15.6 billion

Money out of sub-Saharan Africa:

Debt repayments: over £1 billion

Profits sent home by U.K. companies in Africa: £4 billion

African imports of British goods: £4.5 billion

Capital flight: £17 billion

Total: more than £26.8 billion

Overall U.K. profit from sub-Saharan Africa: £11 billion

Capital flight, by the way, is when someone who has wealth in one country secretes it into a bank in another country, often illicitly.

Looked at this way, says Christian Aid, "the main culprits in this are large corporations and rich individuals who took £22 billion in profits and capital flight from sub-Saharan Africa last year. This money could have been used to build up local economies in Africa but instead it sits in U.K. banks.

"The U.K. government must take action to close the tax loopholes and end the banking secrecy which allows capital flight to flourish."

Early warning: another conflict in the Horn of Africa?

There's a little corner of the Horn of Africa whose people have been getting on, fairly quietly, with building a democracy, clearing their land of mines and generally trying to be peace-loving and functional.

Somaliland's problem, of course, is that it can't persuade anyone else to recognise it as an independent country.

The Republic of Somaliland claimed independence from Somalia in 1991 and last year submitted an application for membership of the African Union. Now, warns International Crisis Group, the spectacular troubles going on in Somalia proper, whose capital was recently captured by militia loyal to the Islamic courts movement, could jeopardise Somaliland's chances of peace.

Writing in Nairobi's The Nation Suliman Baldo, Africa Programme Director for the think tank, says he fears that as the international community supports Somalia's rickety Transitional Federal Government, its claims to sovereignty over Somaliland will be strengthened.

"There's a strong potential for confrontation," says Baldo. "Analysts say the African Union needs to get involved now to prevent another conflict in the Horn."

Flower power for AIDS prevention

The green-thumbed folks at Christian Aid have turned to flower power to highlight the fight against HIV/AIDS in the Caribbean, which has the second-highest HIV infection rate after sub-Saharan Africa.

The British relief and development charity scooped top prize at London's prestigious Hampton Court Palace Flower Show for creating a garden that tells the story of HIV in Jamaica. Wish you were here...?, designed by Claire Whitehouse, invites visitors to step through the picture postcard image of Jamaica and see another side of the island, where 22,000 people are HIV positive.

It's the second time Christian Aid has planted its way to victory at Hampton Court. In 2004, its Senegalese garden thrust the theme of trade justice into the sunlight and won top honours in the process.

Aisling Irwin and Timothy Large Alertnet journalists